Defunct Manufacturer Eligible for Refund of Unutilised CENVAT Credit accumulated on export of finished goods under Bond & LUT: CESTAT Remanded Matter [Read Order]

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad has held that a Defunct Manufacturer is eligible for refund of the unutilised CENVAT Credit accumulated on export of finished goods under Bond & Letter of Undertaking (LUT) without payment of Duty and thus remanded the Excise Tax appeal back to the Original Authority for fresh consideration verifying the facts.

The appeal was filed by the assessee, Suraj Ropes against the Commissioner of Central Excise, raising questions regarding the refund of unutilised CENVAT credit upon the closure of the factory.

The assessee had sought a refund of the accumulated CENVAT credit which they were unable to utilise before shutting down their factory and surrendering their registration with the Central Excise department.

The Assistant Commissioner rejected the refund claim citing the absence of provisions for cash refund of unutilised CENVAT credit at the time of surrender of registration under the CENVAT Credit Rules and Central Excise Rules.

Challenging this decision, assessee filed appeal to the appellate authority, which subsequently upheld the lower authority's ruling and dismissed the appeal.

Aggrieved by the decision, the assessee filed appeal before the CESTAT.

The assessee, represented by Shri R. Subramaniya argued that the closure of the factory prevented them from utilising the accumulated CENVAT credit balance.

The assessee also contended that the refund claim was justified as the accumulation occurred due to exports under bond and LUT and the disparity in excise duty rates between raw materials and finished goods.

The revenue, represented by Shri Tara Prakash, Assistant Commissioner, reiterated the findings of the previous orders, supporting the rejection of the refund claim.

The two-member bench consisting of Mr. Ramesh Nair (Judicial Member) and Mr. C L Mahar (Technical Member) remanded the matter back to the original authority for fresh consideration.

While not expressing any opinion on the merits of the disputed refund claim, the bench highlighted that manufacturers are entitled to claim a refund of unutilized CENVAT credit accumulated on the export of finished goods under bond and LUT.

The bench also emphasized the need for verification of the specific facts in this case before reaching a final decision on the refund claim and stated that all issues would be kept open for consideration during the fresh adjudication process.

In result, the appeal is allowed by way of remand to the original adjudicating authority to decide the matter fresh.

To Read the full text of the Order CLICK HERE

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